The Bank of England is expected to keep interest rates on hold at 3.75%, as uncertainty continues to weigh on the UK and global economy.
Analysts widely expect the Monetary Policy Committee (MPC) to leave the benchmark rate unchanged. The Bank has signalled that it needs more time to judge how conflict in the Middle East could affect inflation, growth and the wider cost of living.
Inflation remains above the Bank’s 2% target, currently standing at 3.3%. While price rises have eased from previous highs, policymakers are still expected to take a cautious approach.
Sandra Horsfield, economist at Investec, said the effects of the Iran conflict are still being felt, while uncertainty over how the situation may develop remains high.
The MPC’s decision, due at 12:00 BST, will be published alongside the Bank’s latest monetary policy report and updated economic forecasts. These will be the first full forecasts since US-Israeli strikes on Iran began in late February.
The Bank is unlikely to offer firm guidance on where rates may go next. Some commentators believe further increases remain possible, while others expect rates to stay unchanged for longer.
The decision matters for borrowers, savers and businesses. Mortgage costs have already been affected, with the average two-year fixed rate rising from 4.83% at the start of the conflict to 5.90%, before easing slightly to 5.81%, according to Moneyfacts.
Savers will also be watching closely. While many accounts beat the 3.75% base rate, those who have not switched recently may still be earning poor returns.
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